Monday, March 2, 2009

The Bear Market Continues Apace

Today's market action was a very good example of how bad markets can become even worse. Just when some (including me) were starting to think that it couldn't be much worse, we have a day like this. Other than two very minor bounce attempts, it was absolute carnage.

On the NYSE there were only 185 stocks increasing in price, while 2,940 were declining. It doesn't get much worse than that. Traders tried to catch some sort of oversold bounce but were quickly overwhelmed by those who were trying to escape this relentless bear.

I wish I could offer you some clear insight into when this might end, but I can't. All I see at the moment is a major downtrend. Yes, we are becoming quite oversold. It just doesn't stay this ugly for that long without some sort of relief, however, betting on a snapback hasn't worked for weeks. Traders looking for a bounce are obviously throwing in the towel today, so maybe that means we are close to some sort of capitulation. The problem is that we don't have any catalyst out there right now, so the sellers pound any strength.

One of these days we are going to have some positive news in the banking sector that is going to give us a big pop. It may or may not last, but because we are so negative now, it will get folks excited for a little while and catch many unprepared. Unfortunately there is no way to anticipate that with any precision.

Stating the obvious, this is what a bear market feels like. Bad. Trying to fight it or deny probably won't work too well. Stay patient and vigilant.